More Than Just The Biggest IPO of 2020

  • Edge Editorial Team

    At Edge Investments, we make investing in small cap stocks enjoyable and edge-ucational. We are here to teach you about investing, keep you up to date on news, and help connect you with companies that you may have a desire to invest in.

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Breaking It Down: 

The trend here is rather obvious. Up. 

As The Very Good Food Company (CANADA: VERY) (U.S.: VRYYF) (EUROPE: 0SI) ascends the ladder from early-stage growth company to budding retail giant, their cash pile, revenue, and market cap are coming right along with them. 

Q1 to Q2 of 2020 displayed the most significant leap, to which we can thank their IPO financing. Although revenue growth was impressive, clocking in over 200% higher, the cash on hand surged to C$3.5 million from a mere C$86,938. Such is the beauty of the public markets: ample financial backing to get to where you need to be.

Revenue wise, a rough 25% growth per quarter from Q2 to Q4 is exactly what you want to see from an early-stage company that is undergoing the capital market treatment. The last 2 quarters of the year saw over 600% growth of Very’s cash pile. With 3 oversubscribed financings totaling C$26 million, the bean butchers ended the year ready to kickstart the next phase of growth. 

Very couldn’t have had a better debut year. They continued to grow their business in the first half of the year while preparing for their market appearance. The second half of the year not only brought in 3 successful financings with a massive upside for all 3 rounds, but afforded the company with a cash pile 28,700% larger than the beginning of the year, and a valuation nearly 30x of their IPO price. 

“We have once again reported record quarterly results as a result of growing interest in our brand,” said Mr. Scott. “This strong growth trajectory that we have achieved quarter over quarter is driven by our ability to strategically enhance our operational capabilities, optimize our logistics network to meet the increasing demand from our eCommerce channel, and secure new wholesale distribution partnerships to expand our geographical footprint across North America. Overall, sales increased 44% from Q4 2020 supported by production from our Victoria Facility as the Rupert Facility was being commissioned. Our products are expected to be on the shelves of major U.S. retailers starting in October 2021 and in smaller natural chains in August 2021; lockstep with the ramp up of production at our Rupert Facility. We look forward to building upon this success and reaching our 2021 goals, including the capability to fulfill upwards of 5,000 eCommerce orders a week and establishing approximately 15,000 points of distribution in Canada and the U.S. while continuing to build on our position as a leader in the plant-based food industry.”

What Does 2021 Have in Store? 

As the new year unfolded, it was time to put the capital to work. 

Bringing the cash pile down to around $17 million and net revenue up 44% to just over $2.6 million, Very had made it very clear that growth season is just beginning. Why? 

  • 3PL Logistics allowed them to effectively double their ecommerce sales. 
  • The acquisition of The Cultured Nut diversified Very into the dairy-alternative market, an industry valued at over US$20 million In 2020 and growing fast.* 
  • Very acquired former marketing partner Lloyd-James Marketing Group Inc., a move that is expected to increase their points of distribution to over 2000 in Canada alone. 
  • Commenced production at their Rupert Facility (formerly occupied by Daiya Foods), a move in which the revenue increases alone, even with just 25% capacity, will significantly improve their P/S Ratio, effectively increasing their target valuation when compared to their peers. 

*Did you know? Very has recently spun out the infrastructure of their newly acquired company The Cultured Nut, and renamed it The Very Good Cheese Company.* 

As we’re almost at Very’s 1 year anniversary of listing, it’s hard to believe we’ve come this far in such a short amount of time. Today, the stock sits 890% higher than its opening price of $0.46/share in June. Revenue has doubled since that period. Cash on hand has doubled since that period, even after a few acquisitions. 

Where will this company go in the next 12 months? Consider this. 

Rupert Facility: 

  • 45,000 square feet 
  • 37,000,000 pounds of annual production capacity 

Victoria Facility: 

  • 3,000 square feet  
  • 1,375,000 pounds of annual production capacity 

Fairview Facility: 

  • 3,000 square feet 
  • 500,000 pounds of annual production capacity 

Patterson Facility: 

  • 25,000 square feet (with first right of refusal for an additional 25,000 square feet) 
  • 98,500,000 pounds of annual production capacity 

Did we mention the Patterson location has not even commenced production yet, and the Rupert location has only just begun with partial capacity? 

The amount of value that Very’s heightened output potential will bring, speaks for itself. With current annual production in the ballpark of 2 million pounds, a full build-out of the current facilities under lease will yield approximately 65 times the capacity they are currently running at, should all of them run at full capacity. 

Now that’s something to look forward to. 

Investing in The Very Good Food Co. is investing in a business that’s about to undergo more fundamental growth than it ever has before

Disclaimer: The Very Good Food Co. is a communications client of Edge Investments, and we own shares in the company.   

  • Edge Editorial Team

    At Edge Investments, we make investing in small cap stocks enjoyable and edge-ucational. We are here to teach you about investing, keep you up to date on news, and help connect you with companies that you may have a desire to invest in.

    View all posts

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